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Adaptive Biotechnologies Q2 Revenues Fall 5 Percent, Beat Analyst Estimates

NEW YORK – Adaptive Biotechnologies said Monday after the close of the market that its second quarter revenues decreased 5 percent year over year, primarily due to a COVID-19 pandemic-related drop in its sequencing business.

For the three months ended June 30, 2020, the Seattle-based immune sequencing firm tallied revenues of $21.0 million compared to $22.1 million a year ago, ahead of analysts' average estimate of $18.8 million.

Sequencing revenue in the second quarter dropped 33 percent to $8.0 million from $11.9 million, while development revenue increased 27 percent to $13.0 million from $10.3 million. Adaptive said that clinical sequencing volume grew 31 percent year over year to 3,136 clinical tests delivered.

During the second quarter, the company continued to advance its first ImmunoSeq Dx clinical product for detecting prior infection with SARS-CoV-2 based on favorable results from a head-to-head, real-world study comparing its T-cell-based test to two leading, undisclosed serology tests, data that will be presented in a forthcoming publication.

In a conference call recapping Q2 financial results, Adaptive Biotechnologies President Julie Rubenstein said that in this study, all three tests were run and compared across 100 convalescent patients from the firm's ImmuneRACE study. At 99.8 percent specificity for all three tests, ImmunoSeq had 92 percent sensitivity versus 90 percent and 87 percent for the two serology tests.

"It is important to note that since our test is a self-learning diagnostic that leverages machine learning, the classifier will incrementally self-improve every time we sequence more samples, making the true sensitivity of our test even higher," Rubenstein said.

Based on these data, she added, the company believes that its clinical validation study for ImmuneSeq Dx currently being designed with the US Food and Drug Administration will result in the test gaining a comparable label to serology tests, with better performance in the real world.

"We plan to enter the market in the fall with a test to detect past infection that will be targeted toward consumers, employers, and surveillance programs," Rubenstein said. "This will allow us to build the foundational commercial and operational infrastructure needed to deliver this test. We anticipate that the data we continue to generate will expand the clinical use cases for our test to potentially include assessing pre-existing immunity based on cross-reactive T cells, post-infection immunity, and immunity from a vaccine, which may need to be monitored for possible boosters over time."

The company also launched a new research product in Q2, ImmunoSeq T-MAP COVID, to offer vaccine developers a tool to measure the T-cell immune response to SARS-CoV-2 vaccines in development and track the persistence of that response over time.

In the oncology market, late last week Adaptive received expanded clearance from the US Food and Drug Administration for its ClonoSeq assay to assess minimal residual disease (MRD) in patients with chronic lymphocytic leukemia (CLL).

"This marks an inflection point in our ClonoSeq business, as it is our first approval in blood and doubles the size of our addressable population under our FDA label," Rubenstein said during the call. "Importantly, it will also support our expansion into the community oncology setting, where most patients with CLL are treated."

Adaptive's Q2 net loss swelled to $33.5 million, or $.26 per share, from $16.4 million, or $1.23 per share a year ago. On average, analysts were expecting a loss per share of $.28. Adaptive used approximately 127.4 million shares to calculate per-share loss in the recently completed quarter compared to about 13.3 million shares a year ago. The company went public in June 2019, raising about $321 million in net proceeds.

Adaptive's Q2 R&D expenses jumped 58 percent to $26.0 million from $16.5 million a year ago, while its SG&A spending grew 70 percent to $26.5 million from $15.6 million.

The firm finished the quarter with $365.4 million in cash and cash equivalents and $204.9 million in short-term marketable securities.

Adaptive said that it is not providing 2020 financial guidance due to the continued uncertainties from the impact of COVID-19.

In morning trading on the Nasdaq, shares of Adaptive were up 3 percent at $38.54.